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Inclusionary Housing to Come to Ontario

In Ontario, many prospective home buyers are priced out of the hot real estate market. Could relief be on the way? In a bid to create more affordable housing options in Ontario, the provincial government is granting municipalities the power to require builders to include affordable housing in new residential projects. The details have yet to be hammered out, but it’s likely that so called “inclusionary zoning” would mandate builders to set aside 10 per cent of any new development for low-to-moderate-income households.

The Impact On Home Prices

This could mean people living in places like Toronto, where the average detached home is over $1 million dollars, could realize their home ownership dreams. But builders are pushing back, warning this could drive prices higher for buyers who don’t qualify for affordable housing.

Kathryn Segal, communications officer at the Ontario Home Builders’ Association, says the industry wants to ensure everyone can afford a home, but are waiting to see what steps each municipality will take. “Our biggest concern is that someone has to pay for the units to be developed; nothing comes for free,” she says. As well, core costs such as land transfer taxes, parkland fees, existing section 37 fees (road work) and development fees will still apply. Says Segal, “Those would then all be translated as a cost per unit for any new home buyer.”

What is Inclusionary Zoning?

Inclusionary zoning, also sometimes called inclusionary housing, aims to create more cost-effective living options for those living in moderate-to-low-income households. Cities set the rules and require builders to create a minimum percentage of affordable housing spots in all new housing developments. For example, if the rule states 15 per cent of housing must be inclusionary, a 200-unit building would require 30 units be made available to those who qualify as low to moderate income.

This concept was first introduced in the U.S. in the early 1970s and has seen success in 400 communities across the nation, including New York, Washington San Francisco and Chicago. Over the last 10 years more than 150,000 affordable units have been created. Now, Ontario wants to bring that initiative here, where housing costs in many communities are out of reach for residents.

What Builders Want

Segal says the Ontario Homebuilders’ Association believes “that everyone deserves a place to call home,” but that can’t happen without support. She adds, “The government has to provide jurisdiction and have programs and incentives in place for developers,”in order for the program to be successful.

In August 2014 Ontario signed an agreement with the federal government to extend the Investment in Affordable Housing (IAH) program. More than $801 million in new funding is being made available over the next five years to improve access to affordable housing that is suitable and sustainable for households across Ontario. The new housing strategy includes $178 million over three years for new housing subsidies and benefits. There is no clear indication of how this money will be divided and when incentives will be made available to developers. Segal would not speculate what higher costs would look like if the incentives were not made available, but says “historically though they have been passed on to the new home buyer.”

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